![\"Foreclosed](\"http:\/\/forestridgevoice.com\/files\/2010\/06\/Foreclosed-Home.jpg\" "\\"Foreclosed")
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You have probably heard a lot about Shadow Inventory lately; it’s another one of those phrases that makes its way into our language when an unusual situation arises demanding an explanation.\u00a0 If you live in South Florida you probably never heard the phrase “cone of error” until a few years ago. \u00a0(BTW, it means the area where a hurricane is most likely to hit or miss!)<\/p>\n
So, what is Shadow Inventory exactly:<\/p>\n
It consists of homes that are not yet on the market but fall into one of these categories:<\/p>\n
* Houses that have not come to market because the homeowners didn’t put their homes up for sale in the last few years hoping that by waiting they will get a higher price.<\/p>\n
* Homes that have already been reposed by the banks but not yet on the market (REO).<\/p>\n
* Homes that are already in the foreclosure proces but have not yet reposed by the banks.<\/p>\n
* Homes that are 90+days behind on their mortgage payments (less than one percent will ever catch up, 99% will become a short sale.)<\/p>\n
Zillow\u00a0 released a survey on the category of “pent up selling demand”.\u00a0 The question asked was, “If you saw signs of a real estate market turnaround in\u00a0the next 12 months, how likely would you be to put your home up for sale?”\u00a0\u00a0 5.3 million homeowners said they would be “very likely” to put their home up for sale, 6.1 million would be very likely and 10.6 million would be “somewhat likely”.\u00a0<\/p>\n
In comparison, 5.2 million existing homes were sold during 2009.\u00a0<\/p>\n
Many organizations have tried to quantify the other category (delinquencies, homes in the foreclosure process and bank owned properties and these are their findings:<\/p>\n
The Mortgage Bankers’ Association believes that there are 4.3 million homes in this category.<\/p>\n
Barclay’s Capital puts the number at 4.7 million.\u00a0<\/p>\n
Capital Economics says 5.5 millon<\/p>\n
Morgan Stanley’s recent study claims 8 million.<\/p>\n
If we take the lowest number in each category (5.3 homeowners being\u00a0very likely to put their homes up for sale and 4.3 million in default) \u00a0there would be an additional 9.4 million homes entering the market.\u00a0 If 5.2 million were sold in 2009, \u00a0and the same number is expected in 2010, \u00a0it isn’t hard to see that there will be an excess of homes on the market.\u00a0 With Inventory at a high and demand at the same pace as last year it can only mean one thing….downward pricing.\u00a0<\/p>\n
Statistics show it will take another 13 years for prices to climb back to where they were at the height of the market in South Florida.\u00a0 For homeowners who plan to sell their home in the next few years, \u00a0it is time to take a look at these statistics and consider your options.\u00a0 If you are lucky enough to have a home that you can enjoy and afford for the next 13 years then your patience will pay off.\u00a0 For others, and that means most of us, 13 years is a long time to wait.<\/p>\n","protected":false},"excerpt":{"rendered":"
\u00a0 You have probably heard a lot about Shadow Inventory lately; it’s another one of those phrases that makes its way into our language when an unusual situation arises demanding an explanation.\u00a0 If you live in South Florida you probably never heard the phrase “cone of error” until a few years ago. \u00a0(BTW, it means<\/p>\n